Medicaid APR-DRG in New York, Texas and Colorado: one septicemia stay, three prices

Same stay, three states

State Medicaid programs that pay hospitals by APR-DRG share a classification, All Patient Refined DRGs with four severity-of-illness levels, but not a payment formula. Here is one stay, APR-DRG 720 at severity 3, priced at a large hospital in each state:

The three weights are close, but they are not on the same scale. Each state calibrates its own weights and pins its own APR-DRG version, so a weight of 1.0 buys different money in each state. The statewide spread for the same stay shows it:

Mount Sinai ranks 16th of 128 New York hospitals for this stay, the 88th percentile.

A weight of 1.0 buys different money in every state.

New York

New York pays the APR-DRG’s service intensity weight times the hospital’s per-discharge case-payment rate, which starts from a statewide base price adjusted for the hospital. Teaching, capital and direct medical education amounts are added per discharge, and days a patient spends waiting at an alternate level of care are paid per diem.

At Mount Sinai: 1.4880 × $10,219.27 = $15,206.27 operating, plus $4,161.96 teaching, $1,276.90 capital and $1,772.74 medical education, for $22,417.87. The alternate-level-of-care per diem is $282.17.

Severity moves the payment a long way. Moving this stay from severity 3 to 4 roughly doubles it:

The weights are older than you might expect. For 2025 rates the state kept the service intensity weights, average lengths of stay and cost-outlier thresholds that took effect July 1, 2018, built on APR-DRG version 34. New York also pays a cost outlier when a stay’s cost passes the threshold for its APR-DRG and severity; for this stay that threshold is $91,619.

Texas

Texas pays the hospital’s standard dollar amount times the APR-DRG relative weight. The standard dollar amount already includes the hospital’s add-ons, so there is no separate teaching or capital line. At Memorial Hermann: $4,468.84 × 1.5380 = $6,873.08. Outlier payments for qualifying stays are separate and need stay details this example does not include. These are the state fiscal year 2026 amounts in this engine; Texas has since posted standard dollar amounts for state fiscal year 2027, which began September 1, 2026.

Colorado

Colorado pays the hospital’s APR-DRG base rate times the weight: at Denver Health, $7,966.93 × 1.4038 = $11,183.98. Long stays are handled with day outliers: each day past the APR-DRG’s trim point is paid at 80% of the DRG per diem, which is the DRG payment divided by the average length of stay. For this stay the trim point is 18 days and the per diem is $2,040.87. Colorado’s weights use APR-DRG version 40, in place since October 1, 2024, and the state has posted version 42 weights effective January 1, 2027.

What payers should take from this

• Percent-of-Medicaid contracts inherit each state’s formula. A managed care rate set as a percentage of the state’s fee-for-service payment moves when the state’s weights, base rates or add-ons move.
• Validate the APR-DRG and the severity like an MS-DRG. The APR-DRG grouper is a licensed product, so a payer that does not license it depends on the APR-DRG and severity the hospital reports, and one severity level can double the payment (see DRG validation).
• Hospital identifiers differ. New York uses operating certificate numbers, Texas uses TPIs and Colorado uses CCNs; a Medicare CCN does not find a New York or Texas hospital without a crosswalk.
• Rate years differ. The New York rates in this engine took effect January 1, 2025, the Texas standard dollar amounts September 1, 2025, and the Colorado base rates were posted for July 1, 2026, pending federal approval when we priced this. None of these rate periods is tied to Medicare’s October 1 update, though Colorado has changed its weights on October 1 before (version 40, in 2024).